Commitments of Traders Report (COT)
What Is the Commitments of Traders (COT) Report?
The Commitment of Traders (COT) report is a weekly publication that shows the aggregate holdings of various participants in the U.S. futures market. Distributed each Friday by the Commodity Futures Trading Commission (CFTC) at 3:30 E.T., the COT report is a snapshot of the commitment of the classified trading bunches as of Tuesday that very week.
The report gives investors exceptional information on futures market operations and builds the transparency of these complex exchanges. It is involved by numerous futures traders as a market signal on which to trade.
How the Commitments of Traders (COT) Report Works
The COT report follows its history back to 1924 when the U.S. Department of Agriculture's Grain Futures Administration issued an annual report framing hedging and speculation activities in the futures market. In 1962, the report was distributed month to month. During the 1990s, the report moved to a bi-weekly publication before going weekly in 2000.
Information that is remembered for the report is arranged on Tuesday, checked on Wednesday before being delivered each Friday. The report gives the data is imagined in graphical form. The report is planned to assist individuals with figuring out the dynamics of the market. As per the U.S. Commodity Futures Trading Commission, "every Tuesday's open interest for futures and options on futures markets in which at least 20 traders hold positions equivalent to or over the reporting levels laid out by the CFTC."
Traders can utilize the report to assist them with figuring out which positions they ought to take in their trades, whether that is a short or a long position. One thing the report doesn't do is sort individual traders' positions in light of legal limitations. This is part of confidential business works on, as per the commission.
The significance of the COT couldn't possibly be more significant. It is a core data source for traders and for most scholastic research on pricing trends in the futures market. All things considered, it has its faultfinders and their issues with the report are justified. The biggest weakness with the COT is that, for a document intended to advance transparency, the rules overseeing it are not transparent.
For instance, traders are classified as non-commercial or commercial, and that holds for each position they have inside that particular commodity. This means that an oil company with a small hedge and a lot larger speculative trade on crude will have the two positions appear in the commercial category. Basically, even the disaggregated data is too aggregated to be said to address the market precisely.
There have been suggestions to distribute more nitty gritty data on a deferral as not to influence commercially sensitive positions, but rather that actually looks far-fetched. Furthermore, regardless of its limitations, most traders concur that even the sketchy data of the COT is better than nothing.
The long rendition of a COT report, notwithstanding the information in the short report, bunches the data by crop year, where fitting, and shows the concentration of positions held by the largest four and eight traders.
Types of COT Reports
As referenced over, the COT Report contains four various types of reports: the Legacy, Supplemental, Disaggregated, and the Traders in Financial Futures report.
The legacy COT is the one with which traders are generally natural. It breaks down the open-interest positions of all major contracts that have in excess of 20 traders. The legacy COT essentially shows the market for a commodity broken into long, short, and spread positions for non-commercial traders, commercial traders, and non-reportable positions (small traders). The total open interest is given as well as changes in open interest.
The COT gives an outline of what the key market participants think and decides the probability of a trend continuing or reaching a conclusion. In the event that commercial and non-commercial long positions are both developing, for instance, that is a bullish signal at the cost of the underlying commodity.
The supplemental report is the one that frames 13 specific agricultural commodity contracts. These are for both options and futures positions. This report shows a breakdown of open interest positions in three distinct categories. These categories incorporate non-commercial, commercial, and index traders.
The disaggregated COT report is another that is normally known by traders. It gives a more profound breakdown of the market participants, splitting commercial traders into producers, shippers, processors, users, and swap dealers. The noncommercial participants are split between managed money and other reportables.
This is intended to give a clearer image of what individuals with skin in the game — the users of the actuals — think about the market versus individuals with profit inspirations or examiners. The disaggregated COT report is, in part, a response to a portion of the analysis of the legacy COT.
Traders in Financial Futures
The last part of the COT Report is the Traders in Financial Futures report. This section frames various contracts like U.S. Treasuries, stocks, currencies, and euros. Likewise with the others, there are four unique classifications in this report: vendor/middle person, asset supervisor/institutional, leveraged funds, and other reportables.
Illustration of a COT Report
|Example COT Report for Selected Financial Futures|
|Contract||Report Date||Exchange||Open Interest||Long||Short||Spread||Long||Short||Spread||Long||Short||Spread|
|DOW JONES INDUSTRIAL AVG- x $5||6/15/2021||CBT||119404||29307||41685||7177||23225||2312||4730||22175||15035||7246|
|DOW JONES U.S. REAL ESTATE IDX||6/15/2021||CBT||38752||2911||26948||6625||24030||0||746||2150||3330||34|
|S&P 500 Consolidated||6/15/2021||CME||666519||43307||166720||73736||272582||81521||63774||50233||78015||54392|
|S&P 500 STOCK INDEX||6/15/2021||CME||42987||16319||12220||87||0||0||0||23873||4681||102|
|E-MINI S&P CONSU STAPLES INDEX||6/15/2021||CME||37581||3107||23303||10210||17958||1819||0||4177||0||396|
|E-MINI S&P ENERGY INDEX||6/15/2021||CME||45052||15208||31992||8828||12450||0||595||2766||1949||669|
|E-MINI S&P 500 STOCK INDEX||6/15/2021||CME||3117658||225593||863151||277592||1362911||407605||318871||246619||481488||156631|
The COT reports give a breakdown of every Tuesday's open interest for futures and options on futures markets in which at least 20 traders hold positions equivalent to or over the reporting levels laid out by the CFTC.
The COT reports depend on position data supplied by reporting firms (FCMs, clearing individuals, foreign brokers, and exchanges). While the position data is supplied by reporting firms, the genuine trader category or classification depends on the predominant business purpose self-reported by traders on the CFTC.
Taking a gander at the model COT in the table above, we can see that Nasdaq 100 futures, traded on the Chicago Mercantile Exchange (CME) had an open interest of 57,779 contracts on June 15, 2021. Of these, 14,320 were longs held by dealers and 10,875 shorts sold by institutional traders. The COT likewise outlines the number of contracts associated with spreads.
COT Report FAQs
How Do You Read a COT Report?
The reports are perused as tables, which each line and column named properly (see the model above). The information in the report demonstrates how much interest there is, both long and short, in different derivatives contracts, and which type of market entertainer is involved.
Where Do You Find a COT Report?
COT reports can be gotten from the CFTC website and can be downloaded in several file formats.
How Do You Use a COT Report in Forex Trading?
Forex traders might utilize currency derivatives COT reports to track down large net long or net short positions. These positions might signal a reversal.
What Is a Gold COT Report?
A gold COT report would classify the holdings in gold derivatives.
- There are four distinct COT reports: the Legacy, Supplemental, Disaggregated, and the Traders in Financial Futures reports.
- These are aggregated and distributed by the CFTC in the U.S.
- COT reports detail the number of long, short, and spread positions make up the open interest.
- Traders can utilize the report to assist them with deciding if they ought to take short or long positions in their trades.
- The Commitment of Traders (COT) report is a weekly publication that shows the aggregate holdings of various participants in the U.S. futures market.